ACA Rigging and Crane Hire Pty Ltd v Westy J Wright Ferntree Gully Pty Ltd

[2013] VCC 1404

IN THE COUNTY COURT OF VICTORIA
AT MELBOURNE Revised
(Not) Restricted

COMMERCIAL LIST
BUILDING CASES DIVISION

Case No. CI-13-04566

ACA RIGGING & CRANE HIRE PTY LTD	Plaintiff
v.
WESTY J WRIGHT FERNTREE GULLY PTY LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	18 October 2013
DATE OF JUDGMENT:	18 October 2013 (revised 21 October 2013)
CASE MAY BE CITED AS:	ACA Rigging & Crane Hire Pty Ltd  v. Westy J Wright Ferntree Gully Pty Ltd
MEDIUM NEUTRAL CITATION:	[2013] VCC 1404

REASONS FOR JUDGMENT

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Catchwords: Building contracts – Payment claims – Earlier proceedings involving a third party resolved by the payment of monies to the plaintiff – Whether these circumstances constituted an abuse of process to prevent recovery by the plaintiff – Plaintiff entitled to judgment – Stay of execution on judgment to permit defendant to pursue cross claims in a separate proceeding – Stay conditional upon payment into an interest bearing account of the disputed part of the judgment sum and to the plaintiff of the admitted part– Section 16(4) Building and Construction Industry Security of Payment Act2002 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J A F Twigg	Noble Lawyers
For the Defendant	Mr S Smith	Thexton Lawyers

HIS HONOUR:

1The plaintiff seeks judgment pursuant to s16(2) of the Building and Construction Industry Security of Payment Act 2002 (“the Act”), in the sum of $72,219.45 together with interest.

2The claim was brought by originating motion dated 4 September 2013 and judgment is sought pursuant to a summons filed 5 September 2013. The claim relates to a number of payment claims made pursuant to the Act in respect of a number of projects the plaintiff carried out at the request of the defendant between 2009 and 2011.

3In respect of each of the payment claims, there is no dispute that:

a.a payment claim was made pursuant to the Act;

b.the defendant did not provide a payment schedule within 10 business days after the payment claim was served;

c.although payments were made is respect of the payment claims, a balance remains outstanding.

4As a consequence of these matters, s16 gave the plaintiff the option of commencing proceedings for the recovery of the outstanding amounts, and provided specifically in s16(4)(b) that “the respondent is not, in those proceedings, entitled- (i) to bring any cross claim against the complainant: or - (ii) to raise any defence in relation to matters arising under the construction contract”.

5The defendant, whilst conceding that the purpose of the legislation is to provide a procedure for contractors or subcontractors to obtain the payment of progress claims in a speedy manner, has submitted that the processes are not available to the plaintiff in the present case for the following reasons:

a.the payment claims were made from dates between early 2010 and mid 2011 and in these circumstances the recovery action is not for the purpose of seeking speedy payment of the progress claims;

b.there are circumstances which amount to an abuse of process which should prevent the plaintiff being entitled to judgment.

6In relation to the question of delay in the bringing of the proceeding, the plaintiff appears to have satisfied the requirements of the Act, which are preconditions to it bringing a proceeding under the Act. There is nothing in the Act which suggests that there are time limits which would debar a plaintiff from bringing a proceeding under the Act, after the expiry of a particular period or a period which the Court may regard as inappropriate by reason of the purpose of the legislation.

7The matters relied upon as constituting an abuse of process relate to what is described in the material as an incident which occurred during the ‘Luther College Project’. The plaintiff is the installer of structural steel and precast panels in the building and construction industry. This work involves the use of cranes. The plaintiff carried out work on the construction of a school building at Luther College pursuant to an agreement between the plaintiff as a structural steel subcontractor and the defendant as the primary contractor on the project.

8The plaintiff used cranes on the project supplied to it by Leggett Cranes Pty Ltd (“Leggett Cranes”). Apparently in November 2009, a crane hired by the plaintiff from Leggett Cranes, tipped over and fell onto the site. The defendant alleges that as a consequence of the crane tipping over and falling on the site, the defendant became responsible to the project managers for delay costs in the sum of $35,359.50 and the defendant further incurred repair costs of approximately $30,000. The defendant says that following this incident, it reached an agreement with the plaintiff that the defendant would withhold the sum of $65,000 from monies that would otherwise have been payable to the plaintiff in respect of the Luther College Project and, because the contract sum was insufficient to cover the defendant’s loss, sums would also be withheld in respect of monies otherwise payable from the defendant to the plaintiff for the Salvation Army Project and the Regis Aged Care Project.

9The plaintiff denies that there was an agreement reached between the parties as alleged by the defendant and says that what happened was that the defendant simply informed the plaintiff that monies would be withheld, and there was no agreement by the plaintiff to the withholding of the monies.

10Subsequently, proceedings were commenced in the Magistrates’ Court at Melbourne by Leggett Cranes  against the plaintiff, presumably for outstanding payments for the work performed and equipment provided by Leggett Cranes to the plaintiff. In the Magistrates’ Court proceeding, the plaintiff filed a counterclaim apparently alleging that the crane which fell over at the Luther College Project site did so as a result of the actions of Leggett Cranes and that as a consequence, Leggett Cranes should be responsible for the payment of any delay costs that were incurred to the project and for the cost of carrying out repairs which resulted from the incident.

11The defendant says that it cooperated with the plaintiff in the presentation of the plaintiff’s counterclaim against Leggett Cranes. Mr Adam Wright, who has sworn two affidavits in the present proceeding, was asked by the plaintiff’s solicitors to swear an affidavit to be used in the Magistrates’ Court Proceeding. A copy of the draft of an affidavit provided to Mr Wright by the plaintiff’s solicitors (who were the solicitors for the plaintiff as defendant in the Magistrates’ Court proceeding) is an exhibit in the present proceeding.

12The affidavit includes the following statements:

11.“Approximately 2 and a half weeks after the incident with the Leggett crane falling over, Westy recommenced works under its sub-contract including replacement of the damaged steel that Leggett had removed. We continued these works into January following return to work after the end of the traditional Christmas/New Year shutdown;

12.Westy incurred approximately $30,000 in replacing the works that had been damaged and later removed by Leggett. Additionally, APM withheld payment from Westy in the sum of approximately $35,000 for what it says it suffered in losses and additional expenses due to the Leggett crane incident;

13.Westy has passed those costs onto ACA by withholding the sum of approximately $65,000.00 from monies that are otherwise payable by Westy to ACA”.

13The defendant alleges that in the Magistrates’ Court proceeding, the present plaintiff recovered from Leggett Cranes, a sum of money representing the $65,000 the defendant had claimed against the plaintiff, and had sought to set off against the progress claims on the Luther College Project and other projects for delay costs and repair costs. Mr Wright has sworn that, from enquires he has made recently from Mr Adam Leggett the managing director of Leggett Cranes, he was informed that the present plaintiff had been paid “the sum of $70,000 in relation to the Luther College incident”.

14In written submissions presented by Mr Smith on behalf of the defendant, it is asserted that “the plaintiff has in fact been paid in respect of its claims by Leggett Cranes  pursuant to the Magistrates’ Court proceeding”, and that “the claim in this proceeding is an abuse of process where the plaintiff seeks to claim what it has already been paid for by Leggett Cranes  pursuant to the Magistrates’ Court proceeding”.

15Alternatively, Mr Smith submitted that the present payment by the plaintiff “would amount to an unjust enrichment of the plaintiff” or that the conduct of the plaintiff was misleading and deceptive in breach of the provisions of the Trade Practices Act or the Australian Consumer Law in that the defendant had been led to believe that the plaintiff would not “strictly enforce the payment claims against the defendant”. Mr Smith also submitted that an equitable estoppel would arise to prevent recovery on the progress claims in these circumstances.

16In my view, it is not appropriate to conclude from the circumstances of the Magistrates’ Court claim and counterclaim, and any subsequent payment in the resolution of those claims, that the plaintiff in the present proceeding has been paid in respect of the payment claims it seeks to pursue in the present proceeding.

17The Magistrates’ Court proceeding involved a claim by Leggett Cranes against the present plaintiff on the basis of unpaid entitlements. The counterclaim apparently raised matters arising from the alleged liability of Leggett Cranes, in respect of the incident in which the crane fell over on site resulting in delay claims and repair costs. The claim the plaintiff makes in the present proceeding relates to unpaid payment claims in respect of the Luther College, Salvation Army and Regis Aged Care projects. The defendant wishes to raise the payment by Leggett Cranes in resolution of the counter claim in the Magistrates’ Court as a basis for defending the claim that it should meet the payment claims, or alternatively to pursue a counterclaim arising out of the construction contract relating to the Luther College Project.

18In my view, s16(4)(b) prevents the defendant from raising those matters in this proceeding and I do not consider that it is appropriate to conclude that the circumstances of the resolution of the counter claim in the Magistrates’ Court proceeding, makes it an abuse of process for the plaintiff to seek judgment in the present proceeding, pursuant to s16(2) of the Act.

19There are subsidiary issues which arise. If judgment is entered, Mr Smith indicated that he would submit that interest should not be paid pursuant to the Act because of the delay in the bringing of the proceeding, and also as a result of the circumstances in which payments had apparently been made following the resolution of the Magistrates’ Court proceeding between the present plaintiff and Leggett Cranes.

20Issues may also arise in relation to whether the Court should grant a stay of any judgment ordered pursuant to the Act pending the resolution of any proceeding the defendant may bring to pursue cross-claims it may have arising from the contract for the Luther College project and in particular, arising from the incident with the crane in November 2009. I will hear further submissions from the parties in relation to each of these matters.

21It is appropriate that I make an order for judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $72,219.45.

22After hearing further argument, I have granted a stay of execution upon strict conditions. I have had regard to the principles enunciated by the courts in relation to the grant of a stay in respect of judgment entered under the Act or equivalent legislation; see Grosvenor Constructions (NSW) (in administration) v Musico & Ors [2004] NSWSC 344 per Einstein J and Asian Pacific Building Corporation  v Aircon Duct Fabrication  & Ors [No 2] [2010] VSC 340 per Vickery J.

23I consider that the unusual circumstances of this case make it appropriate to grant a stay, particularly upon the conditions I have imposed. These circumstances are:

a.the lengthy delay between the dates the various payment claims became due for payment and the issue of proceedings on 4 September 2013;

b.the possible recovery by the plaintiff from Leggett Cranes  of $70,000 proceeding for delay costs and repair costs arising from the incident in December 2009 involving the collapse of a crane on the Luther College project site.

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Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 18 October 2013 and revised on 21 October 2013.

Dated:       21 October 2013

Philippa Gilkes 

Associate to His Honour Judge Anderson